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Why Preferred Bank (PFBC) is a Top Dividend Stock for Your Portfolio
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Getting big returns from financial portfolios, whether through stocks, bonds, ETFs, other securities, or a combination of all, is an investor's dream. But for income investors, generating consistent cash flow from each of your liquid investments is your primary focus.
Cash flow can come from bond interest, interest from other types of investments, and of course, dividends. A dividend is the distribution of a company's earnings paid out to shareholders; it's often viewed by its dividend yield, a metric that measures a dividend as a percent of the current stock price. Many academic studies show that dividends account for significant portions of long-term returns, with dividend contributions exceeding one-third of total returns in many cases.
Preferred Bank in Focus
Preferred Bank (PFBC - Free Report) is headquartered in Los Angeles, and is in the Finance sector. The stock has seen a price change of -6.96% since the start of the year. Currently paying a dividend of $0.43 per share, the company has a dividend yield of 2.58%. In comparison, the Banks - West industry's yield is 2.6%, while the S&P 500's yield is 1.54%.
Looking at dividend growth, the company's current annualized dividend of $1.72 is up 19.4% from last year. In the past five-year period, Preferred Bank has increased its dividend 3 times on a year-over-year basis for an average annual increase of 16.41%. Looking ahead, future dividend growth will be dependent on earnings growth and payout ratio, which is the proportion of a company's annual earnings per share that it pays out as a dividend. Preferred Bank's current payout ratio is 26%, meaning it paid out 26% of its trailing 12-month EPS as dividend.
PFBC is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2022 is $7.41 per share, representing a year-over-year earnings growth rate of 15.60%.
Bottom Line
Investors like dividends for many reasons; they greatly improve stock investing profits, decrease overall portfolio risk, and carry tax advantages, among others. It's important to keep in mind that not all companies provide a quarterly payout.
Big, established firms that have more secure profits are often seen as the best dividend options, but it's fairly uncommon to see high-growth businesses or tech start-ups offer their stockholders a dividend. Income investors have to be mindful of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. That said, they can take comfort from the fact that PFBC is not only an attractive dividend play, but also represents a compelling investment opportunity with a Zacks Rank of #2 (Buy).
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Why Preferred Bank (PFBC) is a Top Dividend Stock for Your Portfolio
Getting big returns from financial portfolios, whether through stocks, bonds, ETFs, other securities, or a combination of all, is an investor's dream. But for income investors, generating consistent cash flow from each of your liquid investments is your primary focus.
Cash flow can come from bond interest, interest from other types of investments, and of course, dividends. A dividend is the distribution of a company's earnings paid out to shareholders; it's often viewed by its dividend yield, a metric that measures a dividend as a percent of the current stock price. Many academic studies show that dividends account for significant portions of long-term returns, with dividend contributions exceeding one-third of total returns in many cases.
Preferred Bank in Focus
Preferred Bank (PFBC - Free Report) is headquartered in Los Angeles, and is in the Finance sector. The stock has seen a price change of -6.96% since the start of the year. Currently paying a dividend of $0.43 per share, the company has a dividend yield of 2.58%. In comparison, the Banks - West industry's yield is 2.6%, while the S&P 500's yield is 1.54%.
Looking at dividend growth, the company's current annualized dividend of $1.72 is up 19.4% from last year. In the past five-year period, Preferred Bank has increased its dividend 3 times on a year-over-year basis for an average annual increase of 16.41%. Looking ahead, future dividend growth will be dependent on earnings growth and payout ratio, which is the proportion of a company's annual earnings per share that it pays out as a dividend. Preferred Bank's current payout ratio is 26%, meaning it paid out 26% of its trailing 12-month EPS as dividend.
PFBC is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2022 is $7.41 per share, representing a year-over-year earnings growth rate of 15.60%.
Bottom Line
Investors like dividends for many reasons; they greatly improve stock investing profits, decrease overall portfolio risk, and carry tax advantages, among others. It's important to keep in mind that not all companies provide a quarterly payout.
Big, established firms that have more secure profits are often seen as the best dividend options, but it's fairly uncommon to see high-growth businesses or tech start-ups offer their stockholders a dividend. Income investors have to be mindful of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. That said, they can take comfort from the fact that PFBC is not only an attractive dividend play, but also represents a compelling investment opportunity with a Zacks Rank of #2 (Buy).